No one wants to have bad credit, it’s just bad! The worst part about bad credit is that once it starts sinking in and you find the debt piling up, it can multiply and things can spin out of control very easily and quickly. You may even be taking on more loans in an attempt to clear existing debt. This creates more damage than it fixes anything.
It’s important not to panic when you see your debt piling up, your credit score dropping and your financial situation looking terrible. Stay cool and make your decisions wisely.
Here’s what you can do to rein in your bad credit and stop it from becoming worse.
Reduce your dependence on Credit Cards to spend
You don’t want to be using too many credit cards to buy. The more higher the debt service ratio, the credit does not improve. So start living on Cash and start paying off some of the credit card debt so that they come down. Do not cut your card off. Cutting your credit cards off means that now you have no more instrument to report on your credit more . Use the credit cards at least once in an year, but continue paying it off an as much as possible but more than the minimum payment. If you have to still use the credit cards, try to pay if off when the statement comes in.
Catch up with Default Payments
Considering that you have bad credit, you probably have quite a few missed debt payments you’ve defaulted on. You can’t expect your credit situation to get better unless you finish paying for them. Another option is to sell off your assets. Catching up with default payments should be a big priority.
Making the Monthly Payments
As your credit starts to stabilise, you need to start making the monthly payments. Always have money set aside so you have enough funds. Paying the monthly payments consistently without a miss will greatly see your credit situation becoming better. The best advice which I have learnt from somewhere and have been telling my clients is that open an savings account and transfer the amount spend that day on the credit card into that account.
Start a Budget
Though it would be a surprise if you got a sudden influx of income, you usually have to fix your credit with an already strained income. A budget will help you utilise your monthly income correctly. You’ll start accounting for your expenses and find ways to cut down on unnecessary and excessive ones. This will increase your savings and you’ll have more money to pay off your debts.
Adding Bonus
Instead, of blowing away your bonuses, use it to pay an extra amount for your debt. This will help get rid of your debt faster.
Lower the Interest Rate
One of the best ways to improve your credit is to lower the interest rate. By lowering the interest rate, you’ll owe a smaller debt and you’ll have to pay a smaller monthly payment. This is just an try but worth asking.
The best way to get your lender agency to lower the interest rate is to improve your credit score. A better credit score would put you in a good negotiating position with the lender and since your credit situation is improving, you can demand more.
If you plan on living under a roof and on a comfortable bed, follows these tips and your credit will get fixed swiftly.
